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Thursday, 30 July 2009

Latest guidance on patent threats

Zeno Corp (Formerly Known As Tyrell Inc) & Another v BSM-Bionic Solutions Management GmbH & Another[2009] EWHC 1829 (Pat), a ruling by Mr Justice Lewison from the Patents Court, England and Wales, was delivered today. In a judgment that was focused far more on the issues of infringement and validity, there was an inevitably bias towards facts rather than law. However, the question arose as to whether the patent owner had made an unjustifiable threat to issue patent infringement proceedings, after some Boots retail outlets received a somewhat unusual communication (described below).

The "threat" in this case looks like one of those instances where the dictionary meaning of a word and its legal meaning lean in different directions. Of the letter which constituted the alleged threat, the judge says, at paras 96 onwards:

"i) The letter did not mention proceedings or explicitly threaten them;

ii) The letter asserted that "up to this point" the writer could see no difference in the technical solution; but contained a request for the reason why the recipient thought that it need not "take into consideration" the patent;

iii) The writer of the letter was not an English lawyer to whom the conduct of proceedings about patent infringement in England would usually be entrusted.

iv) On the other hand, the letter was not addressed to the manufacturer of Zeno, nor even to Boots head office. It was sent to the stores that were actually stocking the product.

The packaging in which the Zeno product was sold displayed the name and address of the manufacturer in Houston Texas and its UK distributor.

The writer of the letter knew who had manufactured the Zeno device; who had imported it and who was offering it for sale. So the purpose of the letter cannot have been to discover who was infringing the patent (if indeed it was being infringed).

Was the "sole purpose" of the letter to discover whether the patent had been infringed? If the writer of the letter were genuinely concerned to ask about some technical characteristic of the Zeno device that would point out a difference between that device and the device described in the patent the obvious person to write to would be the manufacturer. Why should the retailer know the technical details of what it sold? And even if the retailer did know, surely the relevant person would be someone in head office responsible for Boots' corporate decision to stock it rather than any individual store manager. Why, then, were the letters sent to the retailers? The only answer must be to persuade them to stop selling the Zeno device. It partially succeeded in that objective. In my judgment that means that it cannot be said that "the sole purpose" of the letter was to discover whether the patent had been infringed.

It is true that the letter made assertions about the patent; but it also made assertions about the Zeno device.

Mr Burkill objected that no evidence had been called from Boots to show how they interpreted the letter. I do not think that matters. In Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] A.C. 749 the question was whether a notice given by a tenant to a landlord was valid to terminate a lease. Lord Steyn said:"The question is not how the landlord understood the notices. The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices; and in considering this question the notices must be construed taking into account the relevant objective contextual scene."

In my judgment the same applies here. It is not a question of how Boots understood the letter; but how a reasonable person in the position of Boots would have understood it. Read in context, through the eyes of a retailer, the letter amounted, in my judgment, to a veiled threat of infringement proceedings.".

The judge appears to have got it right here, but the Patents Act 1977, s. 70, which deals with threats, has never been particularly easy to apply. PatLit wonders if it would be helpful if the Intellectual Property Office posted a set of general guidelines, based on judicial rulings, that litigators can refer to, perhaps also with actual examples of letters to suspected or alleged infringers that have been found to constitute threats and those which have not.

Indeed, letters in such terms are pretty standard in Germany. But a letter couched in terms of "Would you care to tell us why you think you don't infringe" is properly addressed to a manufacturer, or the CGC at Head Office, isn't it? What was the German patent attorney doing, directing it to a slew of retail shop managers at Boots the Chemists? Is that practice countenanced by the German courts, to write to the managers of branches of Schlecker or DM Markt, instead of to Head Office? I think that the German patent attorney firm culprit has some serious explaining to its client to do now.

I'm not sure that German law makes the same distinction between primary and secondary infringers as UK law (unless you know otherwise?)

It may also be significant that the standard terms used in this case are not "why do you think you don't infringe" but "why do you feel you need not take the patent into consideration". OK, the effect is similar, but it doesn't explicitly use the 'i' word.

Perhaps what the German attorney needs to explain is why he assumed that UK threats law would be the same as in Germany.

Life is tough for German patent attorneys. Many of them take it for granted that, when it comes to patent law, what goes in Germany must apply the same all over the EU. They are fed a diet of "There are hundreds of patent judges in Germany, and virtually no patent litigation at all in England because it is so ruinously expensive, even for the winner." The proof (they think) is the very small number of reported cases coming out of England.

As for American patent lawyers, who think US law rules the world, so for German patent attorneys, who think they have got it all sorted, on behalf of the entire EU.

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